Iraq stands today at the heart of the regional war: U.S. strikes are targeting militia headquarters inside its territory, while Iran and Iraqi factions aligned with it are attacking U.S. interests and sites belonging to the Iranian Kurdish opposition in Erbil. Meanwhile, the artery of its economy — oil — has come to a halt.
Since 1 March, oil exports from Basra’s ports have been suspended amid the US–Israeli war on Iran and its regional fallout. The halt effectively freezes more than 85 percent of Iraq’s crude exports, roughly 3.3 million barrels per day.
Iraq’s Ministry of Oil has ordered a full suspension of production and pumping at the Rumaila oil field, effective 3:00 PM today, 3 March 2026, marking a shift in the regional conflict’s impact from politics and security into the core of Iraq’s energy sector. According to a leaked official letter issued by Basra Oil Company’s Operations Directorate, the halt follows the closure of the Strait of Hormuz and the disruption of international navigation, which has left tankers avoiding the Gulf and sharply reduced carrier availability at southern ports.
In an economy where oil accounts for over 90 percent of public revenue, any interruption in shipping translates immediately into fiscal strain on the budget, liquidity, and state operations.
In the Kurdistan Region, companies have also suspended production in several fields, removing around 200,000 barrels per day from supply. While northern exports were already constrained by the long-standing shutdown of the Ceyhan pipeline, the crisis has now shifted from a logistical bottleneck to a production challenge.
The wider risk centers on the Strait of Hormuz, through which roughly one-fifth of global oil trade passes. Even without a formal closure, export flows have sharply declined as shipping companies suspend operations due to insurance and security risks. A prolonged disruption could exhaust storage capacity across Gulf producers — including Iraq — forcing wells to shut.
For Baghdad, the numbers are stark. Losing 3.3 million barrels per day at $70 per barrel means more than $230 million in gross revenue lost daily, roughly $150–170 million net after costs. Two weeks of disruption would cost around $2 billion. A month could approach $5 billion, close to a full month of public employee salaries and operational spending.
Beyond immediate losses, market share is at risk. China imports nearly a third of Iraqi crude oil, with India another major buyer. If exports remain unstable, Asian refiners may pivot toward suppliers able to guarantee steady flows, including Russia and Saudi Arabia.
The longer the interruption lasts, the harder it becomes for Iraq to reclaim its position without deeper price discounts. The crisis is fiscal, structural, and immediate.
